Sustainable development of regional economy: institutional framework

. Sustainable development is a guiding principle of modern economic development. It is stipulated by the necessity to reconcile two opposing tendencies – economic progress and environment protection in such a way that will be beneficial not only for current, but future generations as well. Countries incorporate goals of sustainable development in their national policies and legislation as they clearly realize the danger of neglecting environmental problems, which is demonstrated by the authors on the example of disasters and crisis situations worldwide. The authors are convinced that sustainable development of regional economy should be based on a certain institutional framework. They analyze the whole complex of elements and connections between them which institutional framework is comprised of, and come to conclusion that their correlation and complementarity will contribute to harmonious development of the economy of a region with no discrimination against the environment, which exactly corresponds with the goals of sustainable development.


Introduction
All countries of the world are now facing one of the most urgent problems -achieving sustainable development, which poses quite a challenge to fulfil.On the one hand, sustainable development is aimed at ensuring economic recovery; on the other hand, it requires protecting the resource base and the environment, in no way ignoring the interests of future generations.Broadly speaking, the sustainability of economic development implies such state of the economy in which the stability of the output (final) parameters is maintained.These parameters include the indicators of production, as well as social and economic development.
The idea of sustainability of social and economic development is traditionally associated with the satisfaction of the end results of reproduction, i.e. the material and spiritual needs of the population.Accordingly, the sustainability of reproduction, in its turn, is viewed as a social-and-economic concept and is defined as a system of economic relations that provides ongoing maintenance of stability or economic growth in the situation of optimal proportionality at minimal cost and in the conditions of environmental safety, which contributes to a fuller satisfaction of material and spiritual needs of the population of a certain country and its regions.
Sustainable development of the economy in each country, individual region and its industrial systems, as well as general laws of its development and functioning, is characterized by specific features dependent on the conditions of production, resource potential, population mentality, to name just a few factors.Over the period of economic recovery, the revival of all production components starts, shaping a stable level of demand, which is preconditioned by the growing standard of living.At the same time, it is important to point out that attaining the objective of economic recovery bears a price and carries certain negative consequences.If this is the case, the practice of achieving sustainability consists in the choice of the most optimal priorities as well as the most effective strategy to attain the objective.
Nonetheless important is the fact that sustainability follows no particular pattern throughout different historical periods and stages.The theory of evolutionary economics [1] explains that in the economy, with certain regularity, one dominant technological mode is replaced by another, which, in turn, takes the leading role itself.Each subsequent way turns out to be to some extent more effective than the previous ones.These transitions from one way of life to another, alongside with an increase in the production scale, labor productivity, and increasing complexity of economic relations and ties, represent the process of economic evolution at the macro level.Thus, sustainable development may be considered as an evolution-determined stage in the development of economic systems.

Research methodology
The presented research is aimed at identifying institutional framework underlying sustainable development of regions in the Russian Federation.The research is based on scholarly publications devoted to the study of institutional economy in general [2; 3; 4; 5] and institutional aspects of sustainable development, in particular, at global, national and regional levels [6; 7; 8].Some results of the presented research are based on the analysis of the Russian experience of institutional aspects of sustainable development [9; 10].The methodological basis of the research includes such methods as generalization, structural and statistical analysis, systemic methods, correlation analysis.

Results and discussion
3.1 Sustainable development of regional economy

Sustainability as a driving force of modern development
The idea of sustainable development comes from the initiative of German forestry specialists dating back to mid-19 th century.They proposed such a system of forest exploitation, in which the forest is preserved, deforestation does not exceed natural growth and cutting areas are organized in such a way that the forest ecosystem is reproduced without loss.A century later, Canadian fishermen coined the term sustainable development to mean regulation of fishing -they called this way the system of exploitation of fish resources, in which these resources are not depleted, the catch corresponds to the possibilities of simple reproduction of the fish population.It is clear that sustainable development as a system means the exploitation of a resource can continue indefinitely, if extraneous factors unrelated to nature management as such do not interfere.The adjective sustainable emphasizes along with stability, the longterm nature of the process is that it is maintained in such a way that its important properties are continuously reproduced [11,21].
As an economic term sustainable development was first introduced in 1987 in the report "Our Common Future" prepared by International Commission on Environment and Development (Commission Brundtland).In the report sustainable development is defined as a way to eradicate poverty, "a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with future as well as present needs", "a framework for the integration of environment policies and development strategies".In broader terms, it is seen as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs" [12].
Since the 1980s, sustainable development has become an integral part of political, economic and environmental agenda worldwide.All countries are supposed to be actively involved in the initiatives to promote sustainable development at various levels and in various fields since it encompasses all spheres of human activity, as it is formulated in 17 goals (Fig. 1) [3].Still, attitudes and policies are different [13; 14].The history of mankind has repeatedly shown that unrestrained economic growth leads to negative consequences.Further development is hindered due to the limitation of opportunities, which is dependent on the limited character of natural resources.Environmental problems entail the disruption of the overall balance of the biosphere leading to new unpredictable consequences, such as epidemics and climate change.There is direct correlation between environmental problems and social-and-economic problems.The difference between theory and practice is seen in the figure presented below (Fig. 2) [15,12].India: monsoon floods in India and Pakistan killed 2,047 and 1,735 people, respectively.Millions of people were displaced.Landslides and mudslides washed countless homes away.The floods caused significant damage to infrastructure and crops, affecting the economy of the affected regions.Nigeria: Prolonged rainfall led to rivers overflowing their banks and flash floods in low-lying areas.Coastal areas were Drought in the Horn of Africa worst hit especially the Niger Delta region, which is prone to flooding due to its geography.1.4 million people were displaced, 603 people were killed and 2,400 persons were injured by the floods.The floods had a significant impact on agriculture, with many crops destroyed and livestock swept away.The economic situation was dire and led to food shortages and high commodity prices.

3)
the longest and most severe drought on record in 2022 threatening millions of people with starvation.21 million people across the region were food insecure due to the drought.More than 3 million people faced emergency levels of food insecurity in Somalia, Kenya and Ethiopia.The drought has forced over 1.3 million people to abandon their farms and migrate to alternative areas in Somalia The prevention of these disasters could have saved lives, resources and money.Damage control measures proved to be more cost-intensive, still they have not completely neutralized the negative impact of human activity on the environment.
Such events only confirm the need for a new vision which will bring harmony to economy-environment interaction.Governments start realizing that "it is impossible to separate economic development issues from environment issues; many forms of development erode the environmental resources upon which they must be based, and environmental degradation can undermine economic development" [12].They introduce national initiatives and adopt legislature [19; 20; 21] to ensure such economic development within which the anthropogenic impact on the environment does not exceed the generally acceptable limits.
Russia is not an exception in this regard.Having accepted the UN Resolution on Sustainable Development Goals (SDG), the Russian government prepared a report "Voluntary National Review of the progress made in the implementation of the 2030 Agenda for Sustainable Development" which presents the results achieved by Russia in pursuit of all 17 SDG [22].It is necessary to point out that the majority of the goals had been previously and successfully integrated into various national projects [23], which only proves the application of institutional approach to sustainable development and the consolidation of efforts of various actors within the country in attaining the set objectives.

Regional economy in sustainable development paradigm
Having taken the leading position in political and economic relations due to integration trends [24, 27; 25], regions nowadays experience both quantitative and qualitative changes [26; 27] that contribute to enhancing the quality of life, which is manifested in many ways such as income growth, advances in medical and educational spheres, equal opportunities and personal freedom expansion, with no disregard to the enrichment of cultural life.
Sustainable development at a regional level may be defined as a complex process that leads to solving the problems of the population of the region.It is also aimed at improving the living conditions of residents of the region by achieving a balance in social and economic development.All these will go beyond the regional level and expand to the state level, and will inevitably contribute to building a national coordinated economic and social policy at macro and micro levels shaping an integral socio-economic system operating and developing in close relationship and in conformity with the needs of the environment.
The development of the region is understood as any progressive change, primarily in the economic sphere.This change can be both quantitative when economic growth is observed, and qualitative when it comes to structural changes in the content of the development.Undoubtedly, the main goal of regional economic development is to achieve the highest possible quality of life for the population which implies positive influence on economic, social, scientific, technical, technological, environmental, demographic and other processes related to human activity and the development of society within a particular region.
Rational use and conservation of human potential as well as the preservation of the biosphere are also important goals of sustainable development of the region.Within the framework of sustainable development, the region is understood as a territorial integral socioeconomic system, which includes a complex of institutional entities, economic entities, economic agents, natural conditions and society living in this territory.Sustainable development does not imply an immediate boost of economic growth as a result of the rejection of extensive use of natural resource potential, but the elimination of irrational use of environmental resources.To a large extent, sustainable development is aimed at ensuring the quality of life of people, as well as its improvement at the existing level of natural resources employment.We completely agree with the definition of sustainable development of the region proposed by A.V. Loktev and V.I.Menshchikova, that sustainable economic development may be understood "as the whole complex of social-economic, political and other interrelated processes which allow increasing the region's potential to satisfy the growing needs of the citizens living in this territory", "as a process of dynamic building of the territory's capacity, motivation of economic agents for extensive reproduction, increasing competitive power, and, based on all these, gradual enhancement of living standards of the population without employing the resources of future generations" [28].
In this regard, absolutely fair is the opinion of scholars that "practical implementation of the concept of sustainable development requires the active participation of all strata of society: authorities at all levels of government, business structures, organizations and the population" [29].It means that sustainable development should bear upon an effective system of institutions which includes a system of rules (political, social and legal), which create the basis necessary for the prosperity of the economy; a system of norms, which regulate the occurrence of restrictions for all economic entities of the region; the system and activity of political, economic and public institutions.

Institutional framework of sustainable development of regional economy
Identifying the institutional framework of sustainable development at the regional level requires defining institutions.For this, we will turn to a classical definition proposed by D. North in his book "Institutions, Institutional Change and Economic Performance" [3], which has become classic: "Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction" [3,3].Institutional environment is comprised of formal ("rules that human beings devise", i.e. "formal written rules") and informal ("conventions and codes of behaviour", i.e. "unwritten codes of conduct that underlie and supplement formal rules" [3,4]) constituents.
At the same time, institutional environment includes a number of region-constitutive factors: social-demographic institutions (population, its ethnics/religious composition, natural population growth, regional migration issues); institutions that provide interaction between the population and the economic system of the region; institutions that connect natural-resource potential and economic system of the region.Besides, each region includes system-constitutive elements that operate at the regional level: institutes of normative-legal system (government authorities, legal and regulatory framework: federal codified normativelegal acts [Codes] → federal laws → local laws); institutes of finance-budget system (state budget system → state extra-budgetary funds [Pension Fund, Social Security Fund, Federal Compulsory Medical Insurance Fund], state and bank credit, personal and property insurance funds; finance of economic entities and branches [finance of commercial organizations, finances of enterprises]); institutes of administrative system (local authorities; administrative regulation; system of mandatory payments).
As far as regional institutional environment is concerned, it is important to note that one of the most important elements of regional economy is competitiveness of a region, which is directly related to social institutions (economic sphereplants, factories, banks, markets, firms; social spherefamily, education, healthcare, social security, leisure activity organizations; political spherestate, parliament, government, judicial system, political parties; spiritual spheretheaters, museums, science and education organizations).Their effective work contributes to increasing the competitive power of the region, which is based on innovations, human capital, competently build industry structure, institutional structure, regional enterprises, regional infrastructure, investment policy, foreign investment, type of a region and its geographical features.
Bearing in mind all the elements, factors and constituents of the institutional environment of a region, as well as taking into consideration the findings of the research of M.B.Tabachnikova [30], we propose the following institutional framework of sustainable development of regional economy (Fig. 3):

Conclusion
As the research shows, sustainable development is a two-fold process: firstly, it implies survival and further development of the society and civilization and, secondly, it is aimed at the preservation of the natural environment, biosphere in particular.The idea of sustainable development is driven by the necessity to reconcile human needs and the capacity of the natural environment to cope with the harmful consequences of human activity so that these needs can be met not only in the present, but also in the future.In the widest sense, sustainable development is the harmonious (balanced) development of society and its natural environment.Sustainable development of regional economy serves as a starting point for further implementation of the principles of sustainable development at a national level.It is based on a certain institutional framework which, though quite heterogeneous as the values and goals of the elements and actors are diversified, serves as the foundation of social and economic development of the region, in case these values and goals correlate and complement each other within a common strategy of development.

Fig. 2 .
Fig. 2. Correlation of the main elements of sustainable development in theory (on the left) and in practice (on the right) (the three overlapping areas imply Economic development, Environmental protection and enhancement, Social progress; the area where they overlap represents sustainable development)A crisis in the relations with the environment leads to the necessity to harmonize humannature relations.Maintaining a safe environment in places of intensive human activity becomes one of the priorities of human development for the sake of a safe future.There are a lot of examples of crisis situations related to the condition of the environment which have happened through the fault of the humanity (Tab.1)[15; 16; 17; 18].

Fig. 3 .
Fig. 3. Institutional framework of sustainable development of regional economy

Table 1 .
Examples of disasters / crisis situations and their impact of the environment and economy.